Africa lead­ers sign ‘Cape to Cairo’ free trade bloc deal


African lead­ers signed Wed­nes­day a po­ten­tially his­toric 26-na­tion free trade pact to cre­ate a com­mon mar­ket span­ning half the con­ti­nent from Cairo to Cape Town.

The deal on the Tri­par­tite Free Trade Area (TFTA) caps five years of ne­go­ti­a­tions to set up a frame­work for pref­er­en­tial tar­iffs eas­ing the move­ment of goods in an area home to 625 mil­lion peo­ple.

An­a­lysts say the pact could have enor­mous im­pact for African economies, which de­spite growth still only ac­count for about two per­cent of global trade.

The TFTA pact was signed by Egyptian Pres­i­dent Ab­del Fat­tah al-Sisi, Pres­i­dent Robert Mu­gabe of Zim­babwe, Prime Min­is­ter Haile­mariam De­salegn of Ethiopia and Mo­hamed Bi­lal, vice pres­i­dent of Tan­za­nia, at a sum­mit in the Red Sea re­sort town of Sharm elSheikh.

But hur­dles re­main, with the timeline for bring­ing down trade bar­ri­ers yet to be worked out and the deal need­ing rat­i­fi­ca­tion in na­tional par­lia­ments within two years.

“What we are do­ing to­day rep­re­sents a very im­por­tant step in the his­tory of re­gional in­te­gra­tion of Africa,” Sisi said as he opened the sum­mit.

Ad­dress­ing the sum­mit, World Bank Pres­i­dent Jim Yong Kim said the TFTA would al­low Africa “to make tremen­dous progress and move the en­tire con­ti­nent for­ward.”

“Africa has made it clear that it is open for busi­ness,” he said.

The deal will in­te­grate three ex­ist­ing trade blocs — the East African Com­mu­nity, the South­ern African Devel­op­ment Com­mu­nity and the Com­mon Mar­ket for Eastern and South­ern Africa (COMESA) — whose coun­tries have a com­bined Gross Do­mes­tic Prod­uct of more than US$1 tril­lion (885 bil­lion eu­ros).

“The ge­o­graph­i­cal area cov­ers Cape to Cairo... the agree­ment paves the way for a con­ti­nen­tal free trade area that will com­bine the three big­gest re­gional com­mu­ni­ties,” De­salegn said at the sum­mit.

Mu­gabe said the deal will cre­ate a “bor­der­less econ­omy” that would rank 13th in the world in terms of GDP.

Boost­ing In­tra-African Trade

Mem­bers of the three blocs range from rel­a­tively de­vel­oped economies such as South Africa and Egypt to coun­tries like An­gola, Ethiopia and Mozam­bique, which are seen as hav­ing huge growth po­ten­tial.

Ne­go­tia­tors drafted the deal this week at Sharm el-Sheikh, and said it had ad­dressed con­cerns such as man­age­ment of trade dis­putes and pro­tec­tion for small man­u­fac­tur­ers once the TFTA comes into force.

Of­fi­cials said the agree­ment en­vi­sions the even­tual merger of the three blocs.

“The ul­ti­mate goal is to en­sure easy move­ment of goods in th­ese coun­tries with­out du­ties,” said Peter Kiguta, direc­tor gen­eral of the East African Com­mu­nity.

The TFTA has been widely wel- comed by world busi­ness lead­ers, with ex­perts point­ing out that only 12 per­cent of Africa’s trade is be­tween coun­tries on the con­ti­nent.

The United Na­tions Con­fer­ence on Trade and Devel­op­ment said in 2013 that if Africa is to boost its in­tra-con­ti­nen­tal trade, it must fo­cus on cre­at­ing “more space for the pri­vate sec­tor to play an ac­tive role.”

An­a­lysts say that although the con­ti­nent’s growth over the past 15 years out­stripped global GDP ex­pan­sion by nearly three per­cent­age points, fall­ing com­mod­ity prices, power short­ages, po­lit­i­cal in­sta­bil­ity and cor­rup­tion are still hold­ing back its economies.

Egypt’s Min­is­ter of In­dus­try and Trade Mounir Fakhri Ab­del Nour told AFP the TFTA will help Africa boost trade and at­tract in­vest­ments, while also build­ing in­fra­struc­ture and pro­duc­tion ca­pac­i­ties.

“Egypt it­self ex­pects to ex­port about US$5 bil­lion worth of goods over the next five years” to TFTA coun­tries, he said.

Of­fi­cials said com­pa­nies would ben­e­fit from an im­proved and har­mo­nized trade regime, which would re­duce the cost of do­ing busi­ness by elim­i­nat­ing over­lap­ping trade rules.

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.